Mutual Funds

Things to think about when thinking of Mutual Funds

Anyone thinking of investing in Mutual Funds, or indeed any type of investment vehicle, will need to assess their personal situation, and at the very least, begin to honestly answer a few questions about their finances. While the journey of a thousand miles does begins with the first step, it always helps to have a general idea of what direction your journey will be taking you.

Primarily, every investing individual must know their key financial goals. These will be different from one individual to the next. Almost all of us are most interested in saving for our retirement. People generally live longer than they did historically, and so will need to fund life after work. For others, the main financial goal, is saving to buy a new home. Parents are very often interested in adequately funding their children’s education. While the previous list tends to have rather long term goals, some financial goals that you will have, are very short term. Examples of these, include saving for a holiday abroad, or for that new car. Needless to say, know your individual financial goals and time-lines, since they will be at the core of any investment decisions you do make.

Along with widely differing financial goals, investors will also have different investment personalities. At its most basic, this is a question of just how much uncertainty, risk, and volatility you are willing to tolerate in all your investments. For example, many investors are not willing to risk their invested capital, and will seek relatively low risk investments, with their associated lower but more stable returns. Some investors though, are able to tolerate huge fluctuations in the daily, or monthly values of their investments, in the hope that over the long term, they will earn higher rates of return. Such investors have to have nerves of steel, and stick with the market or double up their investment, even when the markets swing significantly ‘against’ them.

Also worth considering, as you begin to explore and evaluate the differing investment options, is the source of any funds you will have to invest. Many people will find they have to re-adjust their spending habits, to cut out needless expenses, and have money to put aside for a rainy day. For others, delaying planned expenditure, such as the replacement of a car, will be necessary choice to make. Still others will, for one reason or another, have a lump sum of cash to invest immediately. Each of these examples, will have a different investment profile, and would therefore be looking for different things in any investment options they make.

What is certain though, is that because of the power of compound interest, the sooner you begin investing and setting aside money, the better off you will be. Start today if you can. Start, even if all you are putting aside is very little small of money in the grander scheme of things. Getting into the habit of saving will be beneficial to you in the long term, when you are able to save larger sums of money.

Anyone thinking of investing in Mutual Funds, or indeed any type of investment vehicle, will need to assess their personal situation, and at the very least, begin to honestly answer a few questions about their finances. While the journey of a thousand miles does begins with the first step, it always helps to have a general idea of what direction your journey will be taking you.
Primarily, every investing individual must know their key financial goals. These will be different from one individual to the next. Almost all of us are most interested in saving for our retirement. People generally live longer than they did historically, and so will need to fund life after work. For others, the main financial goal, is saving to buy a new home. Parents are very often interested in adequately funding their children’s education. While the previous list tends to have rather long term goals, some financial goals that you will have, are very short term. Examples of these, include saving for a holiday abroad, or for that new car. Needless to say, know your individual financial goals and time-lines, since they will be at the core of any investment decisions you do make.
Along with widely differing financial goals, investors will also have different investment personalities. At its most basic, this is a question of just how much uncertainty, risk, and volatility you are willing to tolerate in all your investments. For example, many investors are not willing to risk their invested capital, and will seek relatively low risk investments, with their associated lower but more stable returns. Some investors though, are able to tolerate huge fluctuations in the daily, or monthly values of their investments, in the hope that over the long term, they will earn higher rates of return. Such investors have to have nerves of steel, and stick with the market or double up their investment, even when the markets swing significantly ‘against’ them.
Also worth considering, as you begin to explore and evaluate the differing investment options, is the source of any funds you will have to invest. Many people will find they have to re-adjust their spending habits, to cut out needless expenses, and have money to put aside for a rainy day. For others, delaying planned expenditure, such as the replacement of a car, will be necessary choice to make. Still others will, for one reason or another, have a lump sum of cash to invest immediately. Each of these examples, will have a different investment profile, and would therefore be looking for different things in any investment options they make.
What is certain though, is that because of the power of compound interest, the sooner you begin investing and setting aside money, the better off you will be. Start today if you can. Start, even if all you are putting aside is very little small of money in the grander scheme of things. Getting into the habit of saving will be beneficial to you in the long term, when you are able to save larger sums of money.